Friday, September 26, 2003

RTLZ reports as did 1.1a2, about the initiative of the Distri-group to issue pre-paid cards, to be used for payment on the web. These kind of cards can be considered e-money, similar to the www.bon concept.

The card is named Wallie-card, some brief info can be found at the Wallie-card- homepage. It appears as if the card will be targeted at younger customers and that a free game will be part if the introduction strategy.

Thursday, September 25, 2003

CNet News.com reports that better integration facilities would help Paypal improve its offering to the market:

'What would be perfect for me is if the user never had to leave my site,' said Safran, a Reseda, Calif.-based Web developer.

He also said he would like to see PayPal work better with his e-commerce software. Safran and other Internet merchants are raising issues like these as PayPal tries to diversify its user base beyond eBay's online auction community, which accounted for nearly 70 percent of the $2.8 billion in payments it processed in the second quarter

After a lot of preparation, today the official announcement is made that a joint venture is established between Banksys, Interpay and SSB. It's name is SiNSYS. I assume the name stands for synergy in systems, or something like that.

The joint-venture is headquartered in Brussels. Banksys and Interpay each hold a 24.5% interest, SSB holds 51%. SiNSYS will provide services for the processing of international debit and credit card transactions of its shareholders. Current annual volumes amount to 800 million transactions for 18 million cards and 500,000 merchants. These figures are expected to rise to approximately 1.5 billion transactions for 30 million cards and 800,000 merchants by 2007.

ABN AMRO has introduced buses which incorporate a bank branch in order to properly service the rural areas without a bank branch. In a press release issued together with the Dutch Office of Accessibility, ABN AMRO announces that its service-bus will tomorrow receive a trust mark. The trust mark tells consumers that the building (or bus) is accessible to the disabled.

Tuesday, September 23, 2003

The Online Publishers Association (OPA) reported that spending on paid content grew to $748 million in the first half of 2003, an increase of 23 percent over the same period last year.

....

OPA said the top three paid content categories--personals and dating, business and investment, and entertainment and lifestyles--accounted for 65 percent of spending in the first half of 2003, up from 61 percent in 2002.

....

Subscriptions continue to be the dominant price model, accounting for 88.5 percent of paid content revenue in the first half of 2003.

Het Financieele Dagblad reports that mr. Willem Stolwijk, CEO of Interpay will leave his post at the end of the year. Mr Ben Haasdijk will take over his position. The news is published two days before more details will be known of the future cooperation between Interpay and Banksys.

Interestingly, if I'm not mistaken, a similar event occured some months ago at Banksys with CEO Chris Lebeer suddenly leaving (see this article). So I wouldn't be surprised if more organisational changes will be announced in due time.

Monday, September 22, 2003

Perception and reality may not always be the same, certainly not if the issue is security of payments instruments. The EU has commissioned a study, that was presented last week at a conference on Payments and Security.

At the conference, a range of distinguished speakers (including representatives of ECB, the Commission, Visa, Mastercard, European Payments Council) presented their vision. Hans v/d Velde, President of Visa Europe had some interesting Visa-information:

- 80 % of EU consumers also buy in the EU,

- EU exports a net amount of € 60 million euro per month in e-commerce (more people buy from other countries in the EU than EU-citizens buy in other countries),

- in July 2003 60.000 chargebacks were presented to Visa, totaling an amount of € 8 ,illion euro),

- of the chargebacks, 85 % is estimated to be fraudulent,

- e-commerce transactions are 15 % more probable to be fraudulent than regular transactions.

Friday, September 19, 2003

Earlier this week I suddenly noticed an old 5 cents ('Stuiver') in my wallet. Some waiter must have slipped that one to me late while I wasn't paying attention...

My supermarket allows cash-back when I pay with my debit-card. But they've changed the procedure and now make customers sign that they actually received the cash-back. Reason: too many customers actually forgot that they had received the money from the till and in all honesty claimed a second cash back. With this simple and elegant procedure it won't happen again.

Thursday, September 18, 2003

This Tuesday (actually the day that the European Commission held a conference on payments and security), the Dutch Bankers Association published a sticker on its website, to be used by consumers. It states the most important rules (keep the pin-code safe, be careful with the debit-card, don't tell the pin, not even to police or bank employees) and provides a list of phone numbers to be used in case of theft and notification of the bank.

On-line auctioneer eBay will create up to 800 new jobs in Dublin as it expands its European operations, the government announced on Tuesday. The U.S-based company will locate the European headquarters for its PayPal Internet payment unit in west Dublin and will also open a second European customer support center, the office of the deputy prime minister said.

Net effect: Paypal will most probably create EU-typical front-ends to its back-end processing in the US. And thus become a bigger threat for EU-based payment systems and P2P initiatives.

Telecom.paper reports the main findings of their study on the Mobile Market in the Netherlands in the first half year:

- customer base grows to 11.9 million mobile customers at end of June 2003, up 2.1% from December 2002,

- 40.1% of customers signing up for post pay services, up from 38.0% in December 2002,

- revenues at EUR 2.6 billion

- market on track to realise a growth rate of between 10%-15% resulting in EUR 5.3 and EUR 5.4 billion for 2003 (up from EUR 4.7 billion in 2002),

- T-Mobile gained market share (+1,6 to 13,6 %), while KPN continues to hand in market share to its competitors (-1 to 40 %). Telfort (-0,8 to 9,9 %) did not manage to keep up its good performance of 2002, and lost terrain as well. Vodafone (26,6 %) and Orange (8,9 %) slightly up.

- market for non-voice services takes 9.7% of total service revenues,

- non-voice revenues likely to come in under that value at between EUR 560- EUR 570 million, up between 47% and 50% in comparison with the year 2002, during which operators generated EUR 380 million in revenues from non-voice services

comedy producers John Hargrave and Jay Stevens, who have developed new media comedy projects for America Online, ZDTV, the BBC, and dozens of dot-coms that blew all the money we made them on foosball tables.

In the Netherlands, the third Tuesday of september is the day that our government announces its plans and budgets for the next year. Emerce highlights the plans with respect to the introduction of the so-called 'OV-Chipkaart'; a chipcard to be used country wide for public transport.

The Dutch government has announced that the OV-chipkaart needs to be introduced in all regions of the Netherlands in 2007. The Ministry of Transport will decide this year how much money is needed for that. It has earlier explained that a maximum of € 120 million is available. Regional transport companies however, suggest that € 150 million is needed.

Next year, more than 10 trials will run, that will be evaluated in 2005. Operator of the system is Trans Link Systems.

Wednesday, September 17, 2003

Het Financieele Dagblad reported that Interpay and Banksys will give a press conference on their cooperation (joint venture) in the area of credit cards. Immediately speculations occured as to the scope of the cooperation.

On this issue I reported in February this year:

European Card Review reports in their January/February issue that SSB, the Italian 'Interpay' may win the contract of Banksys/Interpay for processing Dutch and Belgian credit-cards. The other contestants for this bid are thought to have been First Data and TSYA.

And in August 2002 I mentioned on this blog that the Board of Directors of Interpay had informed its employees that it had assigned consultancy firm BCG to advise on the future of credit-card processing for Interpay. I predicted the outcome to be that credit-card processing would be too expensive on the small Dutch scale and that outsourcing and cooperation (Banksys) would be one of the options.

Now, let's wait until next week to find out how many Interpay-employees (my guess: some 60-100) will be affected by this decision.

Tuesday, September 16, 2003

Most Dutch newspapers reported today that six criminals (five men and one woman) have been caught. They intercepted re-issued Postbank debit-cards and then phoned the Postbank customer in order to ask for the pin. Starting 2002, they've managed to get their hands on € 800.000 out of 350 accounts.

Now, when's the time that criminals begin to understand that these crimes really don't pay...?

Monday, September 15, 2003

What we do know is that there is somewhere between 250,000 and 750,000 identity theft victims every year. While many cases are small, the U.S. Secret Service reported in one year investigating more than 7,000 cases with an average cost to victims and financial institutions of $217,000 or a total cost of about $1.5 billion. The American Banking Association reports identity fraud losses to its members of around $1 billion per year and the credit card companies absorb around $1.5 billion per year in such fraud losses.

Friday, September 12, 2003

According to this press release the POS-terminal suppliers in the Netherlands have set up an industry association. Its name is Nederlandse Leveranciers Betaalsystemen (NLB: translated: Dutch Suppliers Payment Systems) and its members are:

-Alphyra Benelux BV

-Banksys Nederland

-CCV Holland BV

-EFT Systems Nederland BV

-Quality Equipment Benelux BV

The organisation has been set up to ensure proper communication and discussion about changes that can be expected at the POS-side of payments (EMV, EMV, EMV).

Wednesday, September 10, 2003

Three men are facing long jail sentences after pleading guilty, Friday (Sept. 5) to running the UK's biggest ever credit card fraud at Middlesex Guildhall Crown Court. The trio stole details of 847 cards of Heathrow Express rail passengers who had paid for their journey by credit cards. They passed on the infor a gang of forgers who cloned 8,790 credit cards for use in the UK and on the Continent.

Mastermind was Sunil Mahtani, 26, a non-resident Indian national who worked in IT for Checkline Plc, the company that processed Heathrow Express's credit card transaction. Mahtani obtained the data simply by downloading it from the computer processing the transactions.

Tuesday, September 09, 2003

One of the most difficult things to explain with respect to e-payments, use of the pincode and the legal discussion of fraud cases is the difference between the general rules and the consideration of these rules in a specific case. We've just had this nice example in the Netherlands.

A consumer is being issued a renewed debit-card which is sent to the home-address. Then, a criminal phones the consumer pretending to be an employee of the Postbank, the issuing bank and asking for the pin-code. Interestingly, the 'employee' appears to know the first two digits of the pin-code, which makes a trustworthy impression. Now under a false pretext, the consumer is convinced to provide the last two digits. After that the customers' debit card was being mis-used and the consumer (now a victim) claimed money from the Postbank.

Generally speaking, the legal rules are very clear. Customers should not mention their pin to anyone. Not even close family or employees of banks. And if they do ignore this instruction, they are legally liable for all the damage incurred. Yet, the case above was brought before the dispute resolution committee. The committee stated that in this specific case, the consumer could not be held liable. Their argument was that in the situation where the 'bank employee' appears to know the first two digits of the pincode, it is understandable that the customer believes the criminal at the other end of the phone is the bank.

I think the ruling in this case shows that general rules, in their application in specific cases, can and will be weighed so that a balanced and fair end result is reached. But still, this is not a ruling that hereby allows everyone to tell their pincode's over the phone and not be liable.

Also, I smell something scary or fishy. Scary is the situation where a criminal would steal or intercept a debit card, and stalk the owner and have a look at the pin-code usage to find out the first two numbers. After finding out these numbers, the phone number is obtained in order to get the last 2 digits of the pin-code. The net result is a crime which is rather intrusive.

The fishy scenario is one in which the victim knows it is the only witness of the telephone recording with the criminal and there are no tapes of the conversation. We may assume that the victim does not want to look like someone who is so foolish to tell his or her pin-code over the phone. So he or she may have reshaped - for reasons of increased social acceptability - his or her perception of the telephone conversation to include an element in which it sound logical that the last two digits are being provided ('as the bank employee appeared to know the first two digits of the pincode, I gave only the last two digits'). Which would make it fishy.

Let it be clear. Bank employees don't know pincodes and never have any ground to ask you for it. And consumers don't tell pincodes (or parts of it) to others. Ever !

Het Financieele Dagblad reports that an internal report (Vision 2005) of the Rabobank indicates that more and more local bank-branches will (need to) team up, resulting in an overall number of 350 Rabo bank branches. Staff cuts for overhead departments are also to be expected. In sum a number of 2000 jobs may be at stake.

Monday, September 08, 2003

August 13, the Dutch competition authority published a press release that banks were not allowed to introduce an interchange fee for express credit transfers. The Nma has now published the full text of the ruling (download here).

It is interesting to note that the Dutch central bank (De Nederlandsche Bank NV, DNB) is one of the participants in the interbank agreement. At the same time the central bank is of course part of the European System of Central Banks. Remember that article 2 of the Statute of the ESCB states:

The ESCB shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources, and in compliance with the principles set out in Article 4 (ex Article 3a) of this Treaty.

The hypothesis (to be further investigated in my upcoming PhD research) could be that by and large the central bank does not realise (or sufficiently analyse) the effects of its behaviour from the competiton point of view.

Saturday, September 06, 2003

The last two weeks, some ads in the Metro and Spits (free newspapers, distributed at train stations) informed the public that a pre-paid Mastercard would soon become available. Advantage: no loan applications and check with the credit registration office (BKR) would be required. Furthermore if you run out of the pre-paid funds you cannot use the card. The translated name of the company is: No-BKR.

The consumer tv-programme Kassa wanted to know more about the product and started enquiries. As such I had the opportunity to contribute to the tv-programme and inform the public on the card and the website. No-BKR wanted to introduce a standard pre-paid Mastercard. Yet, it did not have the required license as an e-money institution, nor the appropriate contracts and agreements with banks. So, having phoned with Kassa, No-BKR decided to discontinue its marketing campaign.

As an aside, the tv-item of Kassa also warned the consumers that still a number of legitimate sites exist where consumers can very easily apply for a Mastercard (with the highest intrest rates legally allowed). Most of these agressively marketed sites end up at the DSB Bank. Interested Dutch readers may want to further explore these sites:

And as for me. It's a pity I had to leave the openhaard-weblog-meeting in de Vondeltuin quite early in order to be in the studio on time. Attentive viewers may have wondered what the tattoo (flames) was on my right hand. Wel nothing permanent actually, but a remainder of an elementary discount arrangement (cheaper beers) in the Vondeltuin.

Thursday, September 04, 2003

WebWereld informs us that research by ITM International reveals that 25 % of the Internet-community has paid for content via the web. Most are youngsters that really favour downloading music, films and software. A larger group of the respondents is actually willing to pay for content, provided that content can be downloaded quickly.

Wednesday, September 03, 2003

SNS Bank, part of the SNS Reaalgroep publishes a press release to inform us that it now allows payment made by mobile phone (i-mode) from its bank accounts to any other bank account. Until now, such payments were possible by using a Postbank/Telfort/Siemens mobile phone (WAP-application) or with a special contract of ABN AMRO (using the e.dentifier in combination with the mobile phone). So SNS is the first to use i-mode.

As to the security of these payments, Willem de Jager of de Rabobank explained last year at a conference on mobile payments that Rabo has urged SNS Bank not to use i-mode for transactions. And as it turns out SNS has waited until SSL became available on i-mode. So now that SNS has jumped in the water, will other banks follow?

Belgian company Openway has issued this press release about implementing EMV in a pilot project for Interpay Nederland.

The project was: EMV Small Business Acquiring Processing System and the objective of the project to get hands-on acquiring experience in the EMV implementation and certification. This will enable Interpay to acquire full EMV smart card transactions at POS and ATM terminals while minimizing the impact on the legacy system.

Monday, September 01, 2003

Today I came across this very interesting abstract by Kathleen Declercq, about the future of mobile payments. The full thesis (in Dutch) can be downloaded here.

Till 2003, the three main actors will divide the market into a micro market, where payments with a maximum transaction volume of euro 10 are performed; a macro market (> euro 50) and a meso market (between euro 10 and euro 50). The mobile operators will control the micro market, the traditional banking sector is benefited on the macro market and the newcomers will concentrate on the meso market. After 2003, however, banks and operators will launch more advanced systems on the market, and so the convenience of mobile payment systems will improve drastically. During this phase, the simple systems of the newcomers will be eliminated and a real battle will erupt between the banks and the operators to get a hold on the meso market. The operators will obtain the statute of a bank by distributing debit cards themselves. The conclusion of this report is that the operators will eventually control the bigger part of the mobile payment market.

I would imagine her analysis to be quite correct. It puts the decision of the Rabobank to enter the market for micro-payments by developing an open system of their own into the proper perspective.